Reference no: EM133508070

Case Study: LEGO was founded in 1932. The word LEGO is from the Danish words LEg GOdt (play well). Later, it was realized that in Latin the word means "I put together". The firm initially made wooden toys as well as other wood products stepladders, ironing boards, stools, etc. In 1947, the LEGO Group bought a plastic injection-molding machine for toy production and in 1949 the first LEGO Automatic Binding Brick with four and eight studs appeared. LEGO flourished for many years with its innovative toys. However, in 2004, innovation almost bankrupted the Danish toymaker. LEGO had become concerned about low-cost copies of its plastic building products so it sought to diversify into different activities including: theme parks, Clikits craft sets, action figures (Galidor), and a television show among other efforts. All of these were unprofitable and were eventually discontinued. Today, LEGO is growing in an overall declining toy market with a decidedly old technology toy plastic parts that connect to build things. How did LEGO manage such a turnaround?

LEGO used an innovative structure to map its turnaround. This new structure strategically coordinates innovation activities and actions through a cross-functional team. The team takes a broad view and splits the firm's innovation efforts into eight distinct types of innovation:

· Core processes sales, operations, financial planning,

· Enabling processes forecasting, market planning,

· Messaging advertising, website development,

· Offerings packaging, product presentation,

· Platforms creating new uses and designs for the building blocks

· Customer interaction customer service, customer linkages,

· Sales channel retailers, direct marketing, and

· Business model revenue and pricing.

This new structuring has led LEGO into a new product line LEGO board games that players build with LEGO bricks. Such a board game can be different every time it is played. The new board game was launched in the United Kingdom and Germany in 2009 and globally in 2010.

Questions: Respond to the following:

· How do you think the changes that LEGO made will reshape the firm for the long term?

· What suggestions would you have for LEGO s competitors in the declining toy industry? What should they be watching for?